“The research on central bank digital currency has been going on for five years, and now it can be said that it is about to be launched.”On August 10, at the third China Finance 40 Yichun Forum, Mu Changchun, Director of the Payment and Settlement Department of the People's Bank of China, announced this explosive news.What is the central bank digital currency? And why is the upcoming release of the central bank digital currency such explosive news?Don’t be impatient, just listen to what Xiaoba has to say slowly.We know that digital currency is abbreviated as DIGICCY, which is the abbreviation of the English word "Digital Currency", which is an alternative currency in the form of electronic currency.As the name suggests,central bank digital currency refers to digital currency issued by the central government, which is a liability of the central bank, has national credit, and is equivalent to legal tender.China’s central bank digital currency is different from other central bank digital currencies. Its English abbreviation is “DC/EP”.DC=digital currencyIt’s digital currencyEP=electronic paymentElectronic PaymentYao Qian, former director of the Digital Currency Research Institute of the People's Bank of China, once described the central bank's digital currency as"the jewel in the crown of financial technology." He said that the central bank's digital currency will have a huge impact on the development of the future financial system.There are only six countries in the world that have launched central bank digital currencies, namely Ecuador, Tunisia, Senegal, the Marshall Islands, Uruguay and Venezuela. There are also countries that have stated that they are not considering launching central bank digital currencies for the time being, such as Australia, New Zealand and Japan, because they have not yet seen the benefits. China’s view has always been that “it is planned to be launched”, and of course, this plan has lasted for 5 years.Since 2014, the central bank has been active in the research and development of digital currency.As of August 4, 2019, the Central Bank Digital Currency Research Institute has applied for 74 patents related to digital currency.Since last year, relevant personnel from the Digital Currency Research Institute have been working overtime to develop the currency, but before the mysterious central bank digital currency is truly unveiled, we still have many doubts.For example, what is the difference between the central bank digital currency that China is about to issue and the previously hotly debated Libra? Once the central bank digital currency is issued, what impact will it have on our monetary policy? How will our lives be changed? Let's listen to Datou's opinion.First of all, it is far more important for the Chinese economy to make its currency convertible as soon as possible than to use digital currency.Using digital currency to promote the internationalization of the RMB is idealistic. After all, the hegemony of the US dollar has great uncertainty in the short, medium, and even long term, and it is difficult to eliminate or replace it.Moreover, digital currency takes advantage of the network effect. If we look at it from the perspective of the network, the information I have obtained is that basically, the world's Internet or big data is dominated by the United States, and its technology, strength, scale, and the resulting leadership and dominance are very strong.In this case, the popularity of digital currency may weaken the process of the real free convertibility of RMB. Moreover, we should be concerned about the security of financial assets, rather than fantasizing about solving China's current practical and deep-seated problems by relying on a so-called new currency model.Secondly, in today's China, there are too many empty things and too few real things. We need to be pragmatic.If blockchain technology is good for the real economy and enterprises, I think it can be promoted. But so far, I have not really seen how it promotes the real economy, what kind of performance it will bring, and what kind of rate of return it will generate.At present, China's financial system is in the process of restructuring. We need to transform it into "finance as a supplement and economic entities as the main body". The scale of our currency also exceeds that of the real economy, which also needs to be adjusted. If the concept of digital currency is still mainly financial, then Idoubt whether it can promote the real economy from virtual to real.So I stand on a neutral position. The central bank's digital currency is a new thing, and I should support it, but from the perspective of China's reality, I may be opposed to it, because it will make our focus less precise and even diverge our joint efforts and the original intention of our reform.Over the past five years, the main difficulty my country has faced in developing central bank digital currency has been whether to emphasize "digital" or "currency." In plain words, it is whether to focus on "technological innovation" or "monetary attribute innovation."The reason for the acceleration of the pace since last year is simple: major central banks around the world are all involved in the research of digital currencies, such as the "Star Project" of the European Central Bank and the Bank of Japan, the dispute between the Federal Reserve and "narrow banks", etc.As one of the most important central banks in the world, the People's Bank of China must be in the first group of digital currencies.
Some people also compare the central bank's digital currency with Facebook's Libra, but the two are very different. Libra is based on the credit of legal tender and is subject to the constraints of the central bank and financial institutions; the central bank's digital currency is a technological upgrade of legal tender - a digital upgrade of the original central bank currency (M0), which essentially does not change the monetary attributes of bank deposit reserves and cash.Its specific scenarios mainly serve the payment side managed by the central bank- such as transactions between bank reserves and the digital upgrade of cash, which is not that mysterious.But it does bring convenience. For example, the problem of "counterfeit money" will disappear with the direct holding of the central bank's digital currency (replacing the original cash); the anonymity of paper money no longer exists, and transaction information can also be traced and controlled...For ordinary people, transactions and payments are all within the central bank's digital currency payment network. While convenience is improved, privacy is lost.The research and release of digital legal tender is inevitable, because it is both a question of currency development trends and an issue at the national strategic level.From the perspective of the inevitability of currency development, currency will inevitably develop in the direction of low cost, reliability and convenience. General equivalents will inevitably become more and more detached from entities, and their forms will become more and more free.It can be said that cryptographic tokens are the mainstream development direction now.As far as digital legal tender is concerned, the application of blockchain technology is an inevitable trend, and the launch of Libra has confirmed this. Previously, due to the disordered development direction and wild growth of ICO, some people proposed the concept of "coinless blockchain", requiring the separation of blockchain technology and token issuance, but this will have a certain impact on the application and development of blockchain technology and the construction of digital legal tender.From a national strategic perspective, legal digital currency is related to whether my country can gain international competitive advantage in the digital economy era. my country's mobile payment is in a relatively leading position in international payment, but this advantage is not absolute. The release of Libra has sounded the alarm for my country and may cause a huge impact:First, it has constructed a model similar to the global Alipay, which will gradually jump out of the original payment system and regulatory system and establish a new cross-bank, cross-border, and cross-national digital currency virtual account transaction system.This is likely to interfere with or even replace the monetary sovereignty of some countries. What’s worse, it may further compress the international space of the RMBand have a negative impact on China’s “going out” and “One Belt, One Road” strategies.Moreover, this is also a competition for data traffic entrances at a higher level.In the future, the competition for data resources will inevitably intensify. China's payment field, especially the small retail payment field, will face more challenges. The best way is to launch a legal digital currency to deal with it. At this level, the central bank's launch of a legal digital currency is also conducive to the growth of China's payment industry.Over the years, digital currency has demonstrated strong vitality. The central bank may also believe that digital currency will become a general trend, so it begins to prepare for it.In the foreseeable future, traditional legal tender will obviously still be the main medium of circulation in the social economy, and digital currency will temporarily be an attempt and supplement.
In fact, digital currency is a kind of "digital contract" after all. Therefore, if the central bank launches digital currency in the future, I guess it will not be used for daily payments on a large scale, but mainly for financial settlements between institutions. In fact,as an advanced accounting tool, financial accounting, auditing, etc. are precisely the areas where blockchain technology is likely to shine.Digital currency itself is just one of its applications.
